January 20, 2009

Analysts say the latest bank bailout package in the UK highlights the pressure that remains on Australian banks to keep their interest rates high.After injecting capital into its banking system last year, the UK Government is offering banks more measures, including insurance to protect them against bad loans.

Wilson HTM banking analyst Brett le Mesurier says the move underscores the deep uncertainty about the size of banks' bad debts.Mr le Mesurier says Australian banks will continue to struggle to fund their loans, even though they are in a much better situation.